The spot market continues to be on the increase in many regions with a soft slowdown to rates in very few regions. Freight volumes to available trucks ratio is above market expectancy and continues to crunch capacity.
This year so far there has been no signs of any usual seasonal freight trends and based on macro economic data, the US economy in many parts has stalled with GDP down to a record 32.9 pushing the economy into a recession, and unemployment continues to be extremely high.
With further stimulus packages in a delay and an increase in expired unemployment insurance benefits, US consumer spending may force the economy to stall impacting further recovery in the freight and the spot market.
As the freight market continues to show a series of ups in freight volumes to truck capacity and rates, this current strong market conditions continues to appear to be continual. In the lack of service options for consumers to spend money on, we see consumer spending will continue to focus on goods / products rather than services, maintaining the demand for the transportation of these goods nationally via OTR and intermodal, with volumes to continue on the high.
As we have seen from recent data, consumer demand remains strong even with the given macroeconomic conditions. We do not see a normal seasonal decline this year and we see carriers will continue to hold a strong pricing / negotiation position.
Freight volumes are high, however, there is also a truck capacity crunch issue, which has been mostly due to a large number of carriers closing down and drivers staying home causing a major disruption to truck capacity this year, and as we have seen some investment has been made in new equipment by carriers, which should normally be seen as a positive in terms of increasing capacity, but we see this is mostly probably in replacing old equipment rather than new additional capacity being added to the OTR market.
As driving schools were shut in the early days of the pandemic, we see a major delay for new entrants and additional capacity to be added to the OTR freight market. However as some of the stimulus benefits are coming to an end, we see there may be a need for many to return to work, causing many of our nations self-employed owner-operators to return to work, but it is too early to know how many will return or are enticed to return. One of the key stimulus for their return may depend on freight volumes and rates to stay at this level to entice their return.
We also have states that are reopening at different times and this again is also causing an impact on freight to truck volumes with manufacturing output also increasing.
The OTR and freight market in general is out of balance with inconsistent freight demand across all regions.
Van and reefer spot rates will most probably continue to rise and stay strong through to the end of August and flatbed rates also continuing on this trend, with ongoing demand in the construction sector.
The freight market is adapting to changes from consumer spending which is impacting everything from equipment needed to deliver to warehouse capacity among many shippers and receivers. As we have also seen the demand for online shopping has increased causing shippers and carriers to adjust as well this new normality.
As we have highlighted above, in terms of the events that will impact spot rates in the coming weeks and months, it is very difficult to predict where the market is heading, and there are many things we will continue to watch for.
We thank you for your time and hope you found our text interesting and useful. Please note all of the above is based on our experience, research and opinions and should at no time be used or given as any form of business consulting.
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